How is One Child Worth More Than Another?

Many of our community have struggled to understand the way the child support formula, implemented by the NZ government, values one child differently from another.

What do we mean by that? Let us show you some real life examples.

At a recent Q & A with IRD, held on our Facebook page a number of questions were raised in relation to the differing values of children.

Stella asked:

Q: How is it worked out that a child living in the home that the child support is based is considered to have considerably less financial needs than the child now living in the ex partners home?

Lisa had this question:

Q: Why is one child worth more than another just because a parent earns more? All children should be the same whether a paying parent earns $20k or $200k. My three children receive $900 per month from there father and I still think this is too much. I am arranging a private arrangement or else their Dad will never be able to afford to his boys let alone have them every fortnight. But why should my partner who also has three children be paying $1700 per month. Why the difference? Why do some families only receive $75 when another receives $800 for the same amount of children. Are you trying to make paying families worse off and struggling to pay their bills?

Paulette asks:

Q: I would like to know why dependent children aren’t worked out the same as the non-dependent children and after tax is taken off dependent children receive less than the non- dependent children that you are meant to contribute to not 100% pay for? Bit strange that children that live in your care full time cost less than a child that is supported by two parents incomes receiving child support?

The answer from IRD, in relation to the above questions was:

The cost of raising a child for a parent will be different for each parent based on their circumstances.

Research in New Zealand and elsewhere found, that the cost of raising a child is based on the amount of income the parents earn; and it increases as parent’s income increases. These costs can be translated to a percentage of a parent’s income.

For example, the cost of raising one child under 13 for parents earning the average weekly wage was found to be about 15% of their income.

The child support formula therefore uses a percentage of income in different scenarios. This is set out in the child expenditure tables in the legislation and on IR’s website at www.ird.govt.nz/childsupport/assessment/assess/expenditure/

These percentages change as income changes, and depend on the number of children and whether they are under or over 13 years old.

The income we use in the expenditure tables is updated each year based on average weekly earnings from Statistics NZ. It provides a more accurate way to determine the cost of a child to a parent than under the old child support formula.

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What they are saying appears to make sense on the face of it, but unfortunately what has happened is that children have ended up being valued differently.

Some parents only get the minimum child support amount of $74 a month, or even less.

Disturbingly, a number of parents get absolutely nothing at all.

Other parents receive (or pay) 20 times the minimum, or more, per child.

E.g Jonathan pays $1587 for one child per month:

You guy’s were surprised at the last total in the submission I put in. I received a letter the other day as my daughter is turning 13 this month… $1587/month now for one child. That is the better part of $400/week. In what world does it cost even close to $400/week to raise a child?

Apryl receives $62.80 a month:

Now its gone down by $11.. $62.80 a month- thats $753.60 yr. Isnt the minimum $892.I rang IRD this morning and they said ‘That is calculated on his income and we cant discuss this further’

Surely these are two extremes of absurdity?

Look, we all know that our kids are invaluable and money shouldn’t come into it.. but how can anyone seriously convince us of the fairness of a formula that determines that one child costs nearly $400 a week, yet another costs only $15 a week?

To sum it up a different way Jonathan pays more in one month, than Apryl receives in two years!

What Can Be Done About All This Nonsense?

Here at Child Support NZ we are proponents of a flat rate child support system, that does not discriminate between Apryl’s children or Jonathan’s.

Each child, we believe, could have a reasonable standard of living on a sensible set amount per month that was shared between both the parents.

If one parent can’t pay the calculated amount, due to minimal income (or other reasons), then the Government could help top it up as they do now.

The millions of dollars spent on admin reviews, ridiculous expenditure on systems that don’t work and paying staff to try to explain a system, that they probably find hard to believe in themselves would no longer be necessary.

Simplify, start with shared care and no child support, and move to a flat rate from there.

IRD don’t agree with us, and nor does the government.

And why would they? Agreeing with us would be admitting that mistakes have been made. Very costly mistakes.

4 Comments

The system is failing everyone and only bean counters and people rorting the system win. From day one of being forced into this ridiculous system and have wondered how one can assign a cost to raise a child based on income and it doesnt seem right at all. Whatever it does cost should be proportioned out starting at the 50/50 point. For the sake of an example lets say the figure is $10000 (which i think is way to high by the way) so if parents share 50/50 no one should pay. If one parent has a 60/40 share then the parent on the 40 should pay $1000 at 30% share they would pay $2000 all the way down to 0% share = $5000. Doesnt that seem reasonable.

I am not a believer in the new system or the old. I am on sole support and studying full time. I do not recieve child support directly but even if I did it would only be $36.00 a week under the new formula. Her father has worked full time for years and has a modest income of ~$30,000. Previously he paid $18 a week because of a mistake in calculations; this was established by a review officer but they did nothing to recover the money because they deemed it wouldn’t be fair to him. At some point wonder if he is to have an accountability for our daughter. It appears solely up to me to provided everything in future once my study ceases and I gain my masters. I feel like the system has failed me and my daughter.

I think this new system is totally unfair. Scenario – Family, Married couple and 3 children. Two are their children and the child of the mother from previous relationship. There is also a child of the fathers from previous relationship who is with its mother. This Child considers themself too busy to be with father. So father has to pay huge child support for one child whom he doesn’t get to see. When his Child support is calculated $350 pw for the child he does not see, $350 allowed for his 2 children as dependents, and wife and her child not counted as dependents as she is supposed to receive Child support from her ex. Yeah right he pays nothing. In short 1 child is worth $350 pw , 2 are worth $175 pw and one child and his wife are worth nothing pw. How does this work? I might add all the ex’s are working and partners working as well. The ex’ are doing fine while this family is struggling week by week. On phoning IRD to ask about it they were told would not qualify for reassessment and suggested that they should cut back on their food purchases!!! Funny how a wife and 3 children considered in family support assessments yet not considered in child support allowance as dependents. Which idiot came up with these calculations. They are destroying good family relationships and hugely unfair.